Regional Economic Integration

Regional economic integration is the process whereby countries of a region operating to reduce or eliminate barriers to the international flow of products, people, or capital

Five Key EU Institutions

Five Levels of Regional Integration

Common Market

Economic Union

Customs Union

Political Union

Free-Trade Area

Benefits of Regional Integration

Greater Consensus

Political Consideration

Trade Creation

Employment Opportunities

Drawbacks of Regional Integration

Shifts in Employment

Loss of National Sovereignty

Trade Diversion

European Commission

Council of the European Union

Court of Auditors

Court of Justice

European Parliament

Remove barriers to trade among members, but each country has own policies for nonmembers

Remove barriers to trade among members, and set a common trade policy against nonmembers

Remove barriers to trade, labor, and capital among members, and set a common trade policy against nonmembers

Remove barriers to trade, labor, and capital, set a common trade policy against non members, and coordinate members' economic policies

coordinate aspects of members' economic and political systems

Elimination of tariff among member countries increase trade. Buyers can acquire goods and service more cheaply and have a wider selection.

Another potential benefits is easier to gain consensus on trade issues as opposed to working in the far larger WTO.

Regional integration can expand employment by enabling people to move from country to another country for work

Trade being diverted from a more efficient non-member nation to less efficient member nation because of the lower tariffs charged between member nations.

Industries requiring unskilled labor shift to less developed member nations. More developed member nations will attract skilled workers that can increase competitiveness.

Successive levels of integration require nations to surrender more sovereignty

Example: political union requires nations to give up a high degree of sovereignty in foreign policy

Legislative body of the EU. It is the ultimate controlling authority. No proposed legislation becomes EU law unless the Council votes it.

Debates legislation proposed by the Council. It acts as a consultative rather than a legislative body.

It is the executive body of the EU. Implementing EU law and monitoring member states to ensure they are complying with EU laws.

Audit EU accounts, implement EU budget, improve EU financial management, and report to citizens on the use of public funds.

EU court of appeals. One type of case heard is when a member nations is accused of not meeting its treaty obligations. Justices are required to act in the interest of the EU as a whole.